Local suppliers find themselves in a bind

By John Fischer
Staff writer

Posted
12/18/08

ARENAC COUNTY — America has been in a recession since December 2007 and businesses within the automotive industry have felt the heat more than almost any other, especially in Michigan. The Big Three automotive companies (General Motors, Ford, Chrysler) and their suppliers are in uncharted waters and suppliers in Arenac County may not get through unscathed.
Local manufacturers of products used in the automotive industry are on the brink of a major collapse that would potentially bring the economic growth of Arenac County to a standstill.
These companies, though, believe help is on the way as they hope to be able to stave off layoffs and, in the most extreme cases, shutting down all together.
According to three local suppliers, timeliness is important if the companies are to stay afloat.
Brandon Schnettler, of CMI Engineering and Equipment, Inc. (CMI), an AuGres company, says CMI, which employs about 30 people, has already made layoffs and more may be in store.
“We’re at about half of our typical workforce,” Schnettler said of CMI, which produces foundry equipment used in other suppliers of the automotive industry. “We’re not in line to shut down completely yet, but it definitely has come up.”
Ken Kruchowski, owner of Technical Manufacturers, Inc. (TMI) in Standish, says his replacement parts company is in the same boat.
“We (TMI) only have three employees right now,” Kruchowski said. “At one time, about eight years ago, we employed about 20 people.
“We’ve been in a steady decline since 2000. A lot of our customers have gone bankrupt. We hope we don’t have to shut down. I have confidence in the customers we have left.”
Vantage Plastics President Paul Aultman says he is yet to see layoffs in his returnable packaging company located in Standish, which he says relies on the automotive industry for roughly 60 percent of its total production, but does believe layoffs may soon be discussed.
“There’s no formal layoffs predicted,” Aultman said. “(But) production has fell through the floor.
“We’re evaluating everything based on orders at this time.”
In light of the uncertainty surrounding the automotive industry, CMI has been looking for work in other places, says Schnettler.
“We’re getting small orders here and there,” Schnettler said. “But we haven’t had any breakthroughs yet.”
How Congress will handle the automotive industry’s request for a loan, an issue that over the past month has created wide publicity and controversy, is still yet to be seen, but these local manufacturers hope something can get done — and soon.
“Certainly, we have employees whose 401K and IRA plans are at risk,” Aultman said of Vantage Plastics’ dependence on the Big Three. “If something doesn’t happen soon, things will start getting scary for us in the [supplier] industry.”
CMI has open quotes with General Motors and is hoping a loan will help push those orders through, says Schnettler.
“We provide products that a company or supplier uses for five to ten years,” Schnettler said. “So we need new capital for those orders to be filled.”
Kruchowski says he thinks a loan to the Big Three would eventually help, especially in Michigan.
“It would help the state out a lot,” Kruchowski said. “Michigan is, or at least always has been, a manufacturing state. A loan would help spur business and keep us all going in this transition phase.
“Corporate America is worried right now. Individuals aren’t spending on luxury. Everyone is buying the bare essentials and that’s it. We’d all love to go on vacation but it’s just not affordable with this economy. We don’t know what’s going to happen tomorrow.”

UAW Retired Workers Council waiting for good news

NORTHEAST MICHIGAN — For nearly a month, the Big Three automotive companies (Ford, General Motors and Chrysler) have lobbied in front of Congress for a government loan to help keep the American automotive industry afloat, and retired United Automotive Workers (UAW) members, including those who meet monthly at the AuGres Knights of Columbus Hall are anxiously awaiting the decision from the government.
According to Northeast Michigan United Automotive Workers Retired Workers Council (UAWRWC) Chairman Ray Lay, the UAWRWC and its members have been waiting nervously for Congress to step up and help these companies that helped build the foundation of America.
“Sure they’re worried,” Lay said of the seven to eight hundred members of the Northeast Michigan UAWRWC, which spans across seven counties and has satellites in AuGres and Mio. “I’ve had a lot of calls (at the Drop-in center located in Alpena) from members worried about their 401K’s and IRA’s (Individual Retirement Accounts).
“When I retired I got out of the stock market because I never liked the risk. A lot of the people that retired, though, kept their money in the stock market and now they’ve lost a lot of it. The stock market is a funny thing. If they live long enough, they’ll probably see it (stock quote) go back up.”
Lay believes the Big Three will receive a loan. Whether it’s from Congress or President Bush, though, he says he doesn’t know.
“I think the President will come out with loans for the Big Three,” Lay said. “But it shouldn’t have had to go that far.
“The banks on Wall Street didn’t have to make all these confessions or beg or be embarrassed like the heads of the Big Three have. It’s a screwed up system.”
He says he noticed trouble brewing during his tenure at Chrysler twelve years ago when he saw first hand some of the bad lending decisions that lead to the current recession.
“I was always kind of wondering about the production people,” Lay said. “They were living so much off of their overtime for so long that when they were switched to straight time they had troubles paying their mortgages.”
He says members aren’t worried about their pensions right now because they’re vested; meaning money had already been set aside to cover them.
“It affects the working employees pensions but not so much ours,” Lay said. “But if these companies file for bankruptcy it’s hard to tell how a judge might rule.”
He also doesn’t like the idea of a merger between Chrysler and GM.
“About 90,000 people would lose their job,” Lay said. “I really hate to see Chrysler merge with anybody.
“Cerberus, the company that bought out Chrysler, is a financial holding company and I don’t trust ‘em. When they bought the company, they put it up for sale right away. They’re just here to make money off the economic (struggle). I’d really like to see the Big Three make it on their own but I don’t think that can happen.”

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